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Tax Driven Money
By Mathew Forester
I have a problem understanding why taxes create an ongoing need to get dollars. The sole issuer of the dollars has a demand for goods and services for which it pays for with dollars. Recipients of these dollars also have a demand for goods and services for which they use dollars as payment. Why would the imposition of a tax require them to demand more goods and services than usual? Wouldn’t the opposite occur?
Isn’t the public sector demand sufficient to stimulate supply? If not the tax doesn’t help. If it is then the tax is unnecessary unless its to manage inflation, and again that would not be an incentive to acquire more dollars.
What am I missing here?
WARREN MOSLER Reply:January 26th, 2012 at 5:08 pm
think about a property tax on your house to keep it simple.
that tax means you need dollars to not lose your house.
you will then offer what it takes to get those dollars,
and the govt. can then buy what’s offered to it in exchange for its otherwise worthless dollars
Robert Bostick Reply:March 22nd, 2012 at 1:05 pm
Since the Federal Gov. is not constrained by revenue to spend and we’re not faced with high rates of inflation, why must a government as the sole issuer of its own currency levy a property tax upon its citizens?
Nothing constrains that government from mandating that its currency is legal tender and must be accepted and used in market transactions between itself and the rest of society and among members of that society. Greenbacks, for instance. Why would it then levy a property tax given the aforementioned?
It’s a monopolist, there are no competing currency issuers.
From my non-currency resources I produce 100 pounds of bread and sell it to the government, or the government has a grant program to subsidize my production so that I can earn its currency to then eliminate the need for the subsidy, or the government lends me its currency to purchase inputs which produce widgets. There are alternative ways to “get” the government’s currency other than through coercive taxation.
I think there needs to be a better explanation for the impetus to “get” dollars.
WARREN MOSLER Reply:March 23rd, 2012 at 12:48 am
have you read ‘the 7 deadly innocent frauds’ on this website?
Warren, what’s the MMT view on tax evasion?
WARREN MOSLER Reply:November 6th, 2011 at 10:04 pm
aggregate demand is higher than otherwise?
This should be Mathew Forstater, not Forester. And the link is broken.
Here is a Quick View link:
This page also links to a pdf–right click to get it.
plain jane Reply:December 6th, 2011 at 11:47 am
@Jim, Thanks Jim for the quick view link. The other one opens up sideways and I don’t like to print things off. Saving trees up in here, yk.
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Warren B. Mosler